The New Age of Outsourcing

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A number of trends are changing the nature of IT and business process outsourcing, often to the mutual benefit of the buyer and the outsourcing vendor.

Buyers on their second- or third-generation deals want to figure out if the Philippines was the best source for that call center, whether they should narrow their vendor portfolio from four down to two, or if they should bring some towers back in-house. "That initial gap of labor arbitrage has been captured, and now they want to look at the overall operating model and do a global reset before heading into the next generation," says Mancher. "We stop, look at all the pieces within the operating model for IT and business processes, and see if it makes sense." Those pieces include not just IT work but also business process outsourcing and shared services operations. "It has to be a holistic look," Mancher says.

Sometimes that reassessment leads to big changes; other times, it may make more sense to stay the course. A customer might find that achieving more efficiency in a certain area would cost more money and take two years that they don’t have. "It all depends on the case for change," says Mancher.

However, the case for exploring new outsourcing models—whether introducing managed services or service integration, managing by business outcomes, rethinking the RFP, inventing new ways to fund innovation, or taking a more holistic approach—is clear. IT services customers who want more from their next-generation outsourcing relationships should step out of their comfort zones and explore new approaches.